Rocket Companies, Inc., parent of Rocket Mortgage, reported its highest adjusted earnings in two years for the third quarter of 2024, with a total revenue of $647 million and adjusted revenue of $1.323 billion.
However, the Detroit-based lender reported a GAAP net loss of $481 million, or $0.19 loss per diluted share. Driving the loss was $878.3 million loss in the change of fair value of mortgage servicing rights (MSR).
Rocket generated $29.8 billion in net rate lock volume during Q3, a 43% increase over the same period the prior year. The company generated $28.5 billion in closed loan origination volume, a 28% increase over Q3 2023.
Gain on sale margin was 2.78%, an increase of 2 bps over the same period of the prior year.
Both purchase and refinance market share expanded year-over-year, driven by “numerous optimizations in Rocket's processes, teams, marketing, and technology capabilities,” the press release stated.
Home equity loan volume, in particular, grew 78% from last year, confirming Rocket Mortgage as the largest originator of closed end second mortgages nationwide.
“We delivered strong third-quarter results, expanding purchase and refinance market share, and increasing adjusted revenue by 32% year-over-year. Our adjusted EBITDA was the highest in two years,” said Varun Krishna, CEO and director of Rocket Companies. “These achievements highlight the strength and resilience of the Rocket Superstack — our competitive advantage that combines our ecosystem, experience, technology and brand. We've demonstrated that whatever the market brings, we will drive a bright future in helping more Americans achieve the dream of homeownership.”
During the third quarter, Rocket acquired MSR portfolios totaling $311 million, adding $22.4 billion in unpaid principal balance, presenting a strong refinance opportunity as rates decline.
“We have the capacity to support $150 billion in origination volume without adding a single dollar of fixed costs,” said Chief Financial Officer Brian Brown during the Tuesday earnings call.
In October, Rocket Mortgage announced its subservicing agreement with Annaly Capital Management, Inc., a residential mortgage real estate investment trust. Under this agreement, Rocket Mortgage will manage servicing and recapture activities for a portion of Annaly's MSRs, with servicing set to begin in December 2024.
The retail arm of Rocket Mortgage had a loan volume of $14 million, while Rocket Pro TPO originated $12.4 million in the third quarter of 2024.
Additionally, Rocket delivered a Q3 2024 adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $286 million, the highest in two years.
Total liquidity was $8.3 billion, as of September 30, 2024, which includes $1.2 billion of cash on the balance sheet, $1.8 billion of corporate cash used to self-fund loan originations, $3.3 billion of undrawn lines of credit, and $2.0 billion of undrawn MSR lines of credit.
Rocket’s servicing portfolio unpaid principal balance, which includes subserviced loans, was $546.1 billion or 2.6 million loans at the end of Q3 2024. The portfolio generates approximately $1.5 billion of recurring servicing fee income on an annualized basis.
“From January to October 2024, through bulk acquisitions and subservicing, we have acquired or committed to add over $70 billion in unpaid principal balance to our serviced portfolio — a 15% increase from the 2023 year-end balance,” company officials said. “This adds 220,000 new clients to our portfolio, representing prime candidates for future purchases, home equity loans, and refinances."
Looking forward to the fourth quarter of 2024, Rocket expects adjusted revenue to total between $1.05 billion to $1.2 billion.
